Bloomberg News

Australian Consumer Prices Unchanged, Core Inflation Accelerates

January 24, 2012

Jan. 25 (Bloomberg) -- Australian consumer prices were unchanged last quarter banana costs plunged, while a measure of core inflation that accelerated more than economists forecast sent the currency higher.

The consumer price index was unchanged from the previous three months, the Bureau of Statistics said in Sydney today. That was weaker than the rise of 0.2 percent median estimate in a Bloomberg News survey of 25 economists. Prices were 3.1 percent higher than a year earlier, compared with the median forecast of 3.3 percent. The so-called trimmed mean measure advanced 0.6 percent, compared with expectations for a 0.5 percent increase.

Twenty-one of 22 economists surveyed predict Reserve Bank of Australia Governor Glenn Stevens will reduce the 4.25 percent benchmark rate for a third consecutive policy meeting next month. The European debt crisis has dimmed prospects for growth around the world including in Australia.

The result “could convince RBA officials to delay the next rate move, despite the weaker domestic data and the troubles elsewhere, which we believe were a key driver of the twin rate cuts late last year,” Stephen Walters, JPMorgan Chase & Co.’s chief economist in Australia, said in a research report before today’s release.

The nation’s currency strengthened, buying $1.0509 at 11:42 a.m. in Sydney compared with $1.0470 immediately before the report. The so-called Aussie appreciated 5.7 percent last quarter.

Food Costs

Today’s report showed food costs fell 1.5 percent from the previous quarter, led by a 46 percent drop in the cost of bananas, the report showed. Health costs declined 1.2 percent as the price of pharmaceuticals fell 5.6 percent, it showed.

Communication increased 1.1 percent, and recreation and culture gained 0.8 percent, it showed.

Core inflation measures, which exclude the largest price increases and declines, were also published today.

The trimmed mean gauge rose 2.6 percent from a year earlier, the report showed. Economists forecast an annual rise of 2.4 percent.

The weighted-median gauge of inflation advanced 0.5 percent in the fourth quarter, for an annual increase of 2.6 percent. Economists forecast a quarterly rise of 0.5 percent and annual increase of 2.4 percent.

The statistics bureau also released a seasonally adjusted consumer price index that showed an 0.2 percent increase last quarter, for an annual increase of 3 percent.

New Zealand consumer prices dropped 0.3 percent from the third quarter, when they advanced 0.4 percent, government data showed last week.

--With assistance from Daniel Petrie in Sydney. Editors: Brendan Murray, Victoria Batchelor

To contact the reporter on this story: Michael Heath in Sydney at

To contact the editor responsible for this story: Stephanie Phang at

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